External Relationships
Introduction An organization is concerned with maintaining a healthy relationship with suppliers and customer, with whom they interact daily. However, for an organization to be successful, it has to maintain healthy and fruitful relation with all the stakeholders. These stakeholders may or may not be directly involved in the market. But they impact how business […]
Customer Relationship Management (CRM) and Marketing
CRM leverages and amplifies customer base of an organization through efficacious and efficient marketing. In fact CRM has brought up new dimensions in the field of marketing by significantly improving marketing functioning and execution. Intuitive CRM associated marketing strategies like direct marketing, web marketing, e-mail marketing etc. have been matured during the recent past. These […]
Actualizing Business as Usual Strategies for Mission Critical Organizations and Functions
What are BAU or Business As Usual Strategies and how do they Work? Business as Usual or BAU strategies and action plans are meant to keep vital organizational functions and processes up and running even in times of extreme events that disrupt the other functions. This is especially the case when such functions and processes […]
Why Do Brands Have Extensions?
As the business environment is changing, the profile of the organizations as well as the way of conducting business is changing too. Use of technology and globalization has changed everything about business. Marketing is no longer what it used to be. Online marketing has changed the face of conventional marketing and both are incomparable by […]
Running an Online Affiliate Program
Not all affiliate marketing programs are successful. In today’s world we need a robust, well thought out strategy to ensure that the affiliate marketing program is both successful as well as scalable. Affiliate marketing is no longer on the fringe. Instead it is a core sales channel which has tangible and visible effects on any […]
The difference between services and products in software is that whereas the former involve work done for clients that are not the intellectual property of the vendor, the latter are patented by the vendor and sold in terms of licenses to the users.
Further, the difference between products and services in software is that whereas products usually represent high end work done by the vendors, services are usually middle to low end work that is done by the vendor.
Apart from this, products entail higher value adding activities whereas services are lower value adding activities. Moreover, products need time and money to be invested to take them to fruition whereas services are usually measured in terms of the projects delivered within months or a year at the maximum.
The key aspect about products and services in software is that products represent the culmination of several years of effort by the vendor who focuses on a specific niche to develop the products. On the other hand, services are usually projects that are done at the behest of the client and are billed according to time and material accounting or fixed cost accounting.
When we talk about software products and services, it needs to be mentioned that countries like the United States are ahead of the others in terms of innovation as the software and technology companies in the US make products instead of services.
Think Microsoft or Apple and their game changing products. On the other hand, though countries like India are behemoths in the software industry, it is hard to find many companies that have developed products.
Indeed, one of the reasons for outsourcing of services work from the West to the East is that the west can concentrate on higher value adding work like making products and by outsourcing the lower value adding work, they derive cost benefits as well as freeing up of resources that can be deployed for focusing on products.
Further, the reason why the US is way ahead of the rest of the world in terms of innovation is that right from its inception, entrepreneurs were always on the lookout for game changing innovations and thus, when the software and technology industries and companies were being incubated, naturally the entrepreneurs in these sectors started to focus on products as a source of innovation.
However, some recent trends seem to suggest that Asian companies have realized the importance of software products as their software industries mature and hence, services become too low end to sustain them.
Further, now that they have significant capital reserves, they can deploy these resources in investing on product development.
Remember that software products take a lot of investment of time and effort and hence, the Asian software industry is now finally realizing that as they have the needed capital as well as funding from venture capitalists from the west that sense an opportunity here, they can focus on building software products.
Indeed, one of the best-known Asian companies that have a solid banking software product is Oracle Financial Services or the company that was previously known as i-Flex.
This Indian company is a trailblazer as far as software products are concerned and because it invested a lot of time and money apart from effort in building the banking software product, it is now reaping the rewards of all that investment in terms of sales and reputation of its flagship product, Flexcube that is the largest selling banking software product in the world.
Now that we have discussed how products and services square up against each other, it would be worthwhile to note that not all companies can afford to build software products because of the reasons mentioned in the previous sections. Therefore, the role of venture capitalists and angel investors is especially crucial in this respect.
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